Opinion
No. 476794
March 17, 2005
MEMORANDUM OF DECISION
This action arises out of a dispute between the parties regarding the plaintiff's agreement to sell a condominium unit located in the city of New Haven to the defendant. In the two-count complaint the plaintiff, Humphrey Place Condominium Association, Inc., asserts claims to quiet title and for slander of title against the defendant Jessie Snipes. The defendant filed an answer that includes a counterclaim against the plaintiff for specific performance. The plaintiff, in turn, filed an answer and two special defenses to the counterclaim.
The defendant mislabels his counterclaim as a "cross complaint." "Cross-claims are litigated [between] parties on the same side of the main litigation, while counterclaims are litigated, as here, between the opposing parties to the principal action." (Internal quotation marks omitted.) Williams v. Dumais, 34 Conn.Sup. 247, 250, 385 A.2d 686 (1977). "A counterclaim is a cause of action existing in favor of a defendant and against a plaintiff which a defendant pleads to diminish, defeat or otherwise affect a plaintiff's claim and also allows a recovery by the defendant." (Internal quotation marks omitted.) Franchi v. Farmholme, Inc., 191 Conn. 201, 218 n. 2, 464 A.2d 35 (1983). Here, the defendant's claim is a counterclaim.
In count one of the complaint, in which the plaintiff seeks a judgment to quiet title to the unit, the plaintiff alleges that it owns a unit located on its property, designated as Unit S2 (unit), which it acquired pursuant to a judgment of strict foreclosure. According to the plaintiff, the defendant claims that he has an interest in the unit that is adverse to the plaintiff's title. The plaintiff seeks a judgment determining the rights of the parties to the unit and quieting and settling title to the premises in the plaintiff.
In count two, which contains the plaintiff's slander of title claim, the plaintiff incorporates the allegations of count one and further alleges that on or about August 30, 2002, the parties entered into a contract, in which the plaintiff agreed to sell the unit to the defendant and set a date for the sale. According to the plaintiff, the defendant breached the contract in that he failed to obtain financing for the sale within the time set out in the contract. On November 1, 2002, the plaintiff terminated the contract and returned the defendant's deposit. Approximately one month later, the plaintiff entered into a contract to sell the unit to another buyer and set the sale for February 25, 2003.
The plaintiff alleges that on February 15, 2003, the defendant acting with malice, recorded the parties' contract on the land records, thereby clouding the plaintiff's title to the unit and diminishing its value such that the plaintiff is unable to sell it. According to the plaintiff, this conduct violates General Statutes § 47-33j, which prohibits a party from recording a notice on the land records for the purpose of slandering title to the property. The plaintiff seeks damages, attorneys fees and other appropriate equitable and legal relief.
In his answer, the defendant admits that the parties entered into a contract on August 30, 2002, pursuant to which he agreed to purchase the condominium unit for the amount and by the date specified in the complaint. He further admits that he recorded the contract and that he claims an interest in the unit that is adverse to the plaintiff's title thereto. He denies that the contract was terminated and that he engaged in wrongful conduct.
In his counterclaim, the defendant alleges the following facts. After the parties entered into the contract, the defendant in reliance thereon, made significant and costly improvements to the unit. Meanwhile, a lender approved the defendant's application for a mortgage loan on the condition that the plaintiff either obtain a fidelity bond on its officers and directors or an employee dishonesty provision in its insurance policy. The defendant notified the plaintiff of these conditions, but the plaintiff declined to comply with either one and instead unilaterally terminated the contract on November 1, 2002. Although the plaintiff's declaration required the plaintiff to maintain a fidelity bond absent notice to all unit owners, the plaintiff did not provide such notice until after it had terminated the contract. In addition, although the plaintiff's insurance policy included a liability provision for its directors and officers, the plaintiff did not notify the defendant of this provision.
According to the defendant he performed all of his obligations under the contract, and he was ready, willing and able to purchase the unit in accordance with the contract, but the plaintiff failed to perform its obligations. The defendant seeks a decree directing the plaintiff to perform its obligations under the agreement, an injunction restraining the plaintiff from conveying, encumbering or disposing of the unit, money damages, punitive damages, attorneys fees, interest and costs and other necessary and proper legal and equitable relief.
The plaintiff filed an answer to the counterclaim in which it admits that the defendant gave notice that he had obtained a mortgage loan that was subject to the conditions as alleged by the defendant. In addition, the plaintiff asserts two special defenses to the counterclaim. First, the plaintiff alleges that the defendant is estopped from enforcing the contract because he breached the terms thereof in that he did not obtain financing within the required time. Second, the plaintiff alleges that the defendant's counterclaim is barred by the doctrine of laches in that his delay in securing financing was unreasonable, inexcusable and prejudiced the plaintiff's right to the sell the unit.
The plaintiff has filed a motion for summary judgment. Although the plaintiff does not state whether it seeks summary judgment as to the counterclaim as well as the complaint, the court assumes that the plaintiff seeks judgment as to both because a judgment for the plaintiff on its claim to quiet title would necessarily require judgment against the defendant on his counterclaim for specific performance. The defendant opposes the motion on the grounds that he is entitled to specific performance of the contract and that genuine issues of material fact remain unresolved.
I
"[T]he party moving for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § 380 [now § 17-45]." (Citations omitted; internal quotation marks omitted.) Allstate Ins. Co. v. Barron, 269 Conn. 394, 405-06, 848 A.2d 1165 (2004).
The affidavits and other documentary proof the parties submitted establish the following facts. The plaintiff owns the unit at issue, and acquired it pursuant to a judgment of strict foreclosure in a separate foreclosure proceeding, Humphrey Place Condominium Assn. v. MDA, Humphrey Associates Limited Partnership, Superior Court, judicial district of New Haven, Docket No. CV 00 0442845. At a meeting on June 1, 2002, the plaintiff's board of directors resolved to sell the unit to the defendant for $55,000. At that time, the defendant already owned another unit in the association, and was a member of the association and its treasurer. The parties initially entered into a written contract on June 8, 2002, pursuant to which the defendant was to purchase the unit for $55,000. The contract was contingent on the defendant obtaining a thirty-year mortgage within thirty days. The defendant did not obtain a mortgage within that time.
On August 30, 2002, the parties entered into a second written contract for the defendant to purchase the unit. In this contract, which was prepared by the defendant's real estate agent, the parties agreed that the defendant would pay $61,650 for the unit, again contingent on his obtaining a thirty-year loan. In addition, in the financing contingency section of the contract, the parties agreed that "Buyer agrees to apply for such financing immediately and diligently pursue a written mortgage commitment on or before the Commitment Date . . . If Buyer is unable to obtain a written commitment and notifies Seller in writing by 5:00 PM on said Commitment Date, this Agreement shall be null and void and any Deposits shall be immediately returned to Buyer. Otherwise, the Financing Contingency shall be deemed satisfied and this Agreement shall continue in full force and effect." The parties did not fill in a commitment date in this section of the agreement. Elsewhere in the contract they listed the closing date as October 3, 2002, but the parties did not indicate that time was of the essence. In addition, the marketable title section of the contract stated, "Seller further agrees to execute such documents as may be reasonably required by Buyer's title insurance company or by Buyer's mortgage lender."
The defendant pursued a mortgage loan with the assistance of A-Affordable Mortgage Group (A-Affordable Mortgage), and obtained approval for a loan from Option One Mortgage Corporation (Option One) on October 10, 2002. In order to obtain the loan from Option One, the defendant had to make repairs and renovations on the unit. He obtained the plaintiff's permission, paid for the materials, and he and his family completed the work by the end of October.
In addition, Option One conditioned its loan to the defendant on the plaintiff's fulfillment of one of two conditions; the plaintiff was required to either obtain a fidelity bond or add an employee dishonesty provision to its insurance policy. According to Debra Maiorana, who worked for A-Affordable Mortgage, most lenders require that a condominium association obtain a fidelity bond. Indeed, § 22.4 of the plaintiff's declaration specifically provides that the plaintiff will carry "[a] blanket fidelity bond for anyone who either handles or is responsible for funds held or administered by the Association, whether or not they receive compensation for their services . . . The bond shall name the Association as the obligee . . . The bond shall include a provision that calls for thirty (30) days' written notice to the Association, to each holder of a Security Interest in a Unit and to each servicer that services a FNMA-owned or FHLMC-owned mortgage on a Unit before the bond can be canceled or substantially modified for any reason . . ." As for liability insurance, § 22.7 provides that "[t]he Executive Board may obtain and maintain director' and officers' liability insurance, if available, covering all of the Directors and Officers of the Association in such limits as the Executive Board may, from time to time, determine." In addition, § 22.8 provides that "[t]he Association may carry other insurance which the Executive Board considers appropriate to protect the Association of the Unit Owners."
By the end of October 2002, the defendant had satisfied all of the conditions for obtaining the loan from Option One except for providing the lender with proof that the plaintiff had obtained the fidelity bond or added the dishonesty provision to its insurance policy. Despite requests from the defendant, his attorney and Maiorana, the plaintiff was unwilling to meet either condition. Moreover, according to the evidence, the plaintiff did not abide by its obligation to inform the unit owners that it had not obtained a fidelity bond until March 4, 2003.
On November 1, 2002, the plaintiff's attorney sent the defendant's attorney a letter notifying the defendant that he "is in breach of the contract" in that the closing had not occurred and plaintiff was "not aware that [the defendant] has obtained the requisite mortgage financing." The letter further stated that the plaintiff had elected to terminate the contract "effective immediately." Both the defendant and Maiorana attested that the sole reason that the defendant was unable to close on the sale was the plaintiff's refusal to comply with either the bond or the insurance policy requirement. The defendant attested that he was ready, willing and able to purchase the unit in accordance with the terms of the contract.
On December 10, 2002, two other parties signed a contract to purchase the unit from the plaintiff for $103,000, and the sale was set for February 25, 2003. On February 15, 2003, before the sale could be completed, the defendant filed a copy of the August 30, 2002 contract on the city's land records. The plaintiff alleges that it was unable to complete the sale due to the defendant's recording.
II
In the first count of the complaint, the plaintiff seeks to quiet title to the unit, and in his counterclaim, the defendant seeks specific performance of the August 30, 2002 contract. The plaintiff asserts that it is entitled to judgment on count one pursuant to General Statutes § 47-31 in that it has valid title to the unit pursuant to a foreclosure deed, and the defendant's only claim to the unit rests on an invalid contract. The defendant counters that but for the plaintiff's decision to refuse to obtain a fidelity bond, he would have closed the sale, and he, therefore, has a right to specific performance. The plaintiff responds that any rights that the defendant may have enjoyed under the contract were extinguished when the plaintiff rightfully terminated the contract due to the defendant's failure to close on the sale on the date specified in the contract.
An action to quiet title is "a judicial mechanism for parties asserting competing interests in real or personal property to settle the issue of title." Remington Investments, Inc. v. National Properties, Inc., 49 Conn.App. 789, 797, 716 A.2d 141 (1998). "All actions to determine record title of any interest in real property are governed by General Statutes § 47-31 . . . The statute requires that the complaint in such an action describe the property in question, state the plaintiff's claim, interest or title and the manner in which the plaintiff acquired the interest, title or claim, and it must also name the person or persons who may claim the adverse interest or estate. General Statutes § 47-31." Koennicke v. Maiorano, 43 Conn.App. 1, 9, 682 A.2d 1046 (1996). "The essential elements of this action, as recited in General Statutes § 47-31, are that plaintiffs claim title to the property and that the action is brought against such persons claiming an interest in the property that is adverse to that of the plaintiffs." Loeb v. Al-Mor Corp., 42 Conn.Sup. 279, 286, 615 A.2d 182 (1991), aff'd, 224 Conn. 6, 615 A.2d 149 (1992).
General Statutes § 47-31 provides in relevant part: "(a) An action may be brought by any person claiming title to, or any interest in, real . . . property . . . against any person who may claim to own the property . . . or to have any interest in the property, or any lien or encumbrance on it, adverse, or against any person in whom the land records disclose any interest, claim, lien, claim or title conflicting with the plaintiff's claim, title or interest, for the purpose of determining such adverse . . . interest or claim, and to clear up all doubts and disputes and to quiet and settle the title to the property . . .
"(b) The complaint in such action shall describe the property in question and state the plaintiff's claim, interest or title and the manner in which the plaintiff acquired the claim, interest or title and shall name the person or persons who may claim the adverse . . . interest . . .
"(d) Each defendant shall, in his answer, state whether or not he claims any . . . interest in or encumbrance on, the property . . . and if so the nature and extent of the . . . interest or encumbrance which he claims, and he shall set out the manner in which the . . . interest or encumbrance is claimed to be derived . . .
"(f) The court shall hear the several claims and determine the rights of the parties, whether derived from deeds . . . or other instruments or sources of title, and may determine the construction of the same, and render judgment determining the questions and disputes and quieting and settling the title to the property."
Accordingly, "the trial court must first determine in which party record title lies . . ." (Internal quotation marks omitted.) Konikowski v. Everson, 42 Conn.App. 658, 660, 680 A.2d 1366 (1996). To prevail in an action to quiet title, a party "must prove its title or interest in the disputed property by a preponderance of the evidence . . . Moreover, that party must prevail on the strength of its own title and not on the weakness of its adversary's title . . . For a party to prove its claim, it must produce the documents through which it acquired its interest in the property and demonstrate by at least one of the subscribing witnesses . . . the due execution of the [documents]." (Citations omitted; internal quotation marks omitted.) Remington Investments, Inc. v. National Properties, Inc., supra, 49 Conn.App. 797. "[T]he question of whether certain deeds and other written instruments establish record title in a party is a question of law for the court." Mizla v. Depalo, 183 Conn. 59, 63 n. 8, 438 A.2d 820 (1981).
As to the requirement of authenticating a document by the testimony of a "subscribing witness," the Appellate Court has explained that "[a]n acknowledgment serves to authenticate the instrument by furnishing formal proof, through the action of the public official taking the acknowledgement, that the instrument was actually executed by the person whose signature appears upon it . . . It is difficult to explain why there should be a requirement for both subscribing witnesses and an acknowledgment, since that taking of an acknowledgment and the use of a subscribing witness both accomplish the same purpose — assuring that the conveyance is genuine and not fraudulent . . . We believe that the acknowledgment takes the place of the testimony or proof of the unavailability of a subscribing witness." (Citations omitted; internal quotation marks omitted.) Webster Bank v. Flanagan, 51 Conn.App. 733, 739-40, 725 A.2d 975 (1999). In this case, as noted above, the certificate of foreclosure was certified by the city clerk. It was not, however, certified by the clerk of the Superior Court. The defendant did not, however, object to the admissibility of the certificate.
In the present action, the plaintiff submitted a copy of the certificate of foreclosure in Humphrey Place Condominium Assn. v. MDA, Humphrey Associates Limited Partnership, supra, Superior Court, Docket No. CV 00 0442845. The certificate is dated May 1, 2002, is certified by the city clerk and was filed on the land records for the city of New Haven on May 7, 2002. According to the certificate, on March 11, 2002, the plaintiff foreclosed on a condominium lien pertaining to, inter alia, unit S2, "[t]he time limit for redemption in said judgment of foreclosure has passed and title to said premises became absolute in the HUMPHREY PLACE CONDOMINIUM ASSOCIATION on the 24th day of April 2002." The defendant has not submitted any evidence to the contrary. Therefore, the court finds that the plaintiff is record owner of the unit and thus has an interest sufficient to maintain an action to quiet title.
"[T]he relief afforded by the action to quiet title is a full determination of the rights of the parties in the land." DeVita v. Esposito, 13 Conn.App. 101, 104, 535 A.2d 364 (1987), cert. denied, 207 Conn. 807, 540 A.2d 375 (1988); see § 47-31(f). In addition, "[a] plaintiff's proof of an interest necessary to maintain an action under [§ 47-31] is technically distinct from his proof of facts necessary to entitle him to an affirmative adjudication in his favor." Loewenberg v. Wallace, 147 Conn. 689, 693, 166 A.2d 150 (1960). Thus, the court should now determine whether any other person owns the property, or has an interest in it or any lien or encumbrance on the property that is sufficient to defeat the plaintiff's title. General Statutes § 47-31. See Konikowski v. Everson, supra, 42 Conn.App. 660 (in quiet title action involving claim of adverse possession, "[t]he trial court must first determine in which party record title lies, and then, if necessary, determine whether adverse possession has divested the record owner of his title" (internal quotation marks omitted). Here, the issue is whether the defendant has an equitable interest in the unit by virtue of the August 30, 2002 contract, the contract he filed on the land records.
"Under the doctrine of equitable conversion . . . the purchaser of land under an executory contract is regarded as the owner, subject to the vendor's lien for the unpaid purchase price, and the vendor holds the legal title in trust for the purchaser." (Internal quotation marks omitted.) Frances T. Zappone Co. v. Mark, 197 Conn. 264, 267, 497 A.2d 32 (1985). The defendant has an equitable interest in the unit if he is entitled to specific performance of the contract. 14 R. Powell, Real Property (2000) § 81.03[1], p. 81-84. In this context, "[e]quitable conversion makes sense because of the willingness of the courts to grant specific performance of an enforceable real estate contract. Because parties to a real estate contract are able to obtain a decree ordering specific performance of their contract, they can under the doctrine of equitable conversion qualify as equitable owners of the title to the property . . . even before they bring an action for specific performance of the contract." Id.
When a buyer proves that a seller has breached a contract to convey land, the buyer is generally entitled to damages for breach of contract. Lanna v. Greene, 175 Conn. 453, 457, 399 A.2d 837 (1978). "A [buyer] may elect in the alternative to have the contract specifically performed to the extent of the [seller's] ability to comply, with an abatement in the purchase price, if appropriate, subject to the qualification that specific performance is a form of equitable relief which rests in the sound discretion of the court." Id., 457-58.
"It is also fundamental, however, that vendor and vendee may contract to limit their remedies for breach." Lana v. Greene, supra, 175 Conn. 458. In Lana, as in the present case, the contact provided that if the seller was unable to deliver marketable title to the property, the buyer had two options. The buyer could either accept the title that the seller was able to convey, or reject the unmarketable title, obtain a refund of his deposit and treat the contract as null and void. In Lana, the court determined that, pursuant to this provision, "[t]he plain intention of the contract is to compel the plaintiffs to choose between those remedies and no others. In this case, however, the plaintiff does not argue that the contract limits the defendant's remedies.
"[A]n action for specific performance of a contract to sell real estate is an equitable action and is to be determined by equitable principles . . . The granting of specific performance of a contract to sell land is a remedy which rests in the broad discretion of the final court depending on all of the facts and circumstances when viewed in light of the settled principles of equity." (Internal quotation marks omitted.) Webster Trust v. Roly, 261 Conn. 278, 284, 802 A.2d 795 (2002). "As a general rule, equity, in deciding whether to grant specific performance, will consider the fairness of an agreement in accordance with the circumstances as they existed at the time of the execution of the contract even though the property contracted to be sold becomes considerably more valuable at the time performance is due." Robert Lawrence Associates, Inc. v. Del Vecchio, 178 Conn. 1, 19, 420 A.2d 1142 (1979). "Equity depends essentially on the particular circumstances of each individual case. That being so, there can be no established rules and fixed principles laid down for its application, without destroying its very existence and reducing it to positive law." (Emphasis in original; internal quotation marks omitted.) Natural Harmony, Inc. v. Normand, 211 Conn. 145, 150, 558 A.2d 231 (1989).
Nevertheless, "[i]t is settled law . . . that in an action for specific performance, the [party requesting such relief] has the burden of proving all of the essential elements of his cause of action and the burden is primarily on him to show his right in equity and good conscience to the relief sought." Cutter Development Corp. v. Peluso, 212 Conn. 107, 114-15, 561 A.2d 926 (1989). Furthermore, "[a] buyer seeking specific performance must prove that he was `ready, willing and able' to purchase the property . . . A buyer must prove his financial ability to go forward even when a seller entirely refuses to participate in a closing. . . . Whether a buyer has the requisite financial ability is a question of fact . . . In Frumento [ v. Mezzanotte, 192 Conn. 606, 473 A.2d 193 (1984)] this court approved the principle that `when a purchaser of land is left to depend upon a purchase price loan from a third party who is in no way bound to furnish such funds, the purchaser cannot be considered to be able to perform so as to be entitled to specific performance'; (emphasis added) Frumento v. Mezzanotte, supra, 617; but made clear that the determination of what constitutes `ability' is a question of fact to be determined in light of the circumstances of the particular case." (Citations omitted.) Steiner v. Bran Park Associates, 216 Conn. 419, 423-24, 582 A.2d 173 (1990).
In particular, "[w]hen the specific performance of a contract is sought to be enforced, courts of equity will look to the substance of the transaction, to the purpose of the agreement and the real understanding of the parties, whether expressed in the written contract or not, and will never decree the specific performance of a contract when its enforcement will defeat the primary object of the agreement and the real understanding of the parties." Clowes v. Miller, 74 Conn. 287, 295, 50 A. 728 (1901). Furthermore, "[t]o be specifically enforceable, a contract must be fair, equitable, certain and mutual, consistent with policy and made on good consideration"; (internal quotation marks omitted) Burns v. Gould, 172 Conn. 210, 214, 374 A.2d 193 (1977); and "free from fraud, surprise or mistake." (Internal quotation marks omitted.) Sidor v. Kravec, 135 Conn. 571, 574, 66 A.2d 812 (1949).
"Unless a contract for the purchase of real estate provides that time is of the essence, a failure to meet a closing date does not automatically establish a breach; the law provides that the parties must close within a reasonable time of the closing date. Kakalik v. Bernardo, 184 Conn. 386, 392, 439 A.2d 1016 (1981) ('In real estate contracts, the fact that a specific time is fixed for payment of for conveyance does not make time of the essence — at least, it does not make performance at the specified time of the essence. Failure to pay at the time is not per se sufficient to terminate the seller's duty to convey; and failure to convey on the exact date does not per se discharge the buyer.' [Internal quotation marks omitted.]); Tulisano v. Schonberger, 74 Conn.App. 101, 106, 810 A.2d 806 (2002) (`When the parties to a real estate contract want to fix a specific date for performance, we generally have required them to express specifically in the contract that time is of the essence; otherwise, performance within a reasonable time will satisfy the contract . . . Where the agreement does not specifically state that time is of the essence, it is presumed not to be unless the parties have expressed a contrary intent.' [Citation omitted; internal quotation marks omitted.])." Lipshie v. George M. Taylor Son, Inc., 265 Conn. 173, 182 n. 7, 828 A.2d 110 (2003). Moreover, a mortgage contingency clause is generally for the benefit of the buyer, and in this case, the clause did not provide that the plaintiff had the option to cancel the contract if the defendant did not obtain a mortgage commitment by a specific date. See Coneys v. Game, 141 App.Div.2D 795, 530 N.Y.S.2d 23 (1988).
In the present matter, however, the particular issue of the defendant's ability to purchase the property has been resolved by the evidence. Specifically, the evidence establishes that in order for the defendant to be able to close on the sale of the unit, he needed to obtain a mortgage loan from a third party. In addition, the evidence, establishes that Option One, the third party that agreed to provide the defendant with a loan, was not "bound to furnish" the loan absent evidence that the plaintiff either had a fidelity bond or an employee dishonesty provision in its insurance policy. Further, it is undisputed that the plaintiff was not willing to comply with this condition, and that the defendant was not able to close on the sale due to the plaintiff's refusal to do so. Thus, the material issue of whether the defendant had the ability to purchase the unit has been resolved in the negative.
The defendant asserts that he is excused from the requirement of proving his ability to purchase the unit because the plaintiff's conduct made it impossible for him to do so. It is established that, as a rule, "a [party] who has wrongfully prevented the other party from completing performance cannot set up the nonperformance of the other as a defense." Burns v. Gould, 172 Conn. 210, 221, 374 A.2d 193 (1977). As this court has previously explained, [w]here a[nother] party's breach by non-performance contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused.' Restatement (Second) Contracts § 245 [(1981)]. Thus, `[a]n obligor may excuse a condition of its duty by committing a breach that causes the nonoccurrence of the condition. When the condition is excused, the obligor's duty becomes absolute.' [E. Farnsworth, Contracts (1982)] § 8.6. `The breach may take the form of nonperformance, either by prevention or by failure to cooperate, or it make take the form of repudiation.' Farnsworth, supra, p. 380. The breach may be referable to an express term in the contract or, as is often the case, to the obligor's duty of good faith and fair dealing. See Farnsworth on Contracts § 8.6; Restatement (Second) Contracts §§ 205, 245," Pope v. Dean, Superior Court, Housing Session at New Haven, Docket No. SPNH 96 06 47402 (May 22, 1997, Levin, J.) ( 19 Conn. L. Rptr. 673, 675).
This rule is frequently invoked in the context of actions for breach of building contracts. See, e.g., Hartford Electrical Applicators of Thermalux, Inc. v. Alden, 169 Conn. 177, 363 A.2d 135 (1975). Moreover, in this and at least two other jurisdictions, courts have cited to the rule in the context of actions for breach of contracts to sell real property. See Sink v. Meadow Wood Country Estates, Inc., 18 Conn.App. 569, 573, 559 A.2d 725, cert. denied, 212 Conn. 809, 564 A.2d 1072 (1989) ("[buyers'] unwillingness to perform does not make the remedy of specific performance unavailable to them where their unwillingness is the result of the [seller's] failure to fulfill a condition precedent to the [buyers'] performance. 5A A. Corbin, Contracts. (1964) § 1175, pp. 308, 309."); Merrill Lynch Realty/Carll Burr, Inc. v. Skinner, 63 N.Y.2d 590, 596-97, 473 N.E.2d 229, 483 N.Y.S.2d 979 (1984) (sellers' option to cancel upon buyers' failure to obtain mortgage commitment "would not be available to them if . . . [sellers, by refusing to respond to buyers' request to enter premises to make repairs required by lender,] frustrated the [buyers'] ability to obtain the mortgage commitment in the time prescribed"); Jacobs v. Tenneco West Inc., 186 Cal. App.3d 1413, 1417-18, 231 Cal. Rptr. 351 (1986) (seller that breached covenant of good faith in failing to submit contracts to its board of directors could not rely on board's failure to approve contracts as defense to buyer's action for specific performance). It is, in addition, well accepted that under Connecticut law, "[e]very contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." Habetz v. Condon, 224 Conn. 231, 238, 618 A.2d 501 (1992). "`Subterfuges and evasions violate the obligation of good faith in performance even though the actor believes his conduct is justified. But the obligation goes further: bad faith may be overt or may consist of inaction, and fair dealing may require more than honesty. A complete catalogue of types of bad faith is impossible, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party's performance.' [2 Restatement (Second), Contracts § 205, comment (d), pp. 100-01 (1981).]" Elm Street Builders, Inc. v. Enterprise Park Condominium Assn., Inc., 63 Conn.App. 657, 667, 778 A.2d 237 (2001).
Nevertheless "[i]n order to amount to a prevention of performance by the adversary party, the conduct on the part of the party who is alleged to have prevented performance must be wrongful and, accordingly, in excess of his legal rights . . . Although where a party stipulates that another shall do a certain thing, he thereby impliedly promises that he will himself do nothing which will hinder or obstruct that other in doing that thing . . . manifestly this principle has no application where the hindrance is due to some action of the promisor which he was permitted to take under either the express or implied terms of the contract . . . The mere fact that permitted conduct of this nature by one promisor renders unpleasant or inconvenient performance by the other of his agreement effects no discharge of that obligation. (Citations omitted; internal quotation marks omitted.) Godburn v. Meserve, 130 Conn. 723, 726, 37 A.2d 235 (1944).
"Accordingly, the question for determination is whether the [plaintiff's] conduct complained of was wrongful in the sense of being violative of [its] obligations under the contract. In other words, was it . . . conduct which must be said to have been fairly within the contemplation of the parties when the agreement was entered into?" Id., 727. As noted by the court in LiVolsi Construction Co., Inc. v. Shepard, 133 Conn. 133, 136, 48 A.2d 263 (1946), in the context of building construction contracts, "[i]n the absence of an express covenant there is an implied one that the contractor shall be permitted to proceed with his construction in accordance with the contract and that he shall be given possession of the premises to enable him to do so."
For two related reasons, the court concludes that a genuine issue of material fact exists as to whether, at the time they entered into their contract, the parties contemplated that the plaintiff would obtain a fidelity bond.
First, a question of fact exists as to whether the plaintiff's declaration of condominium required it to obtain and maintain such a bond. A condominium declaration is "[e]ssentially a `master deed,' and creates a species of real property [it] defines the rights and duties of the condominium unit or apartment owners, as well as the rights and duties of the developer and the project's management body. Thus the declaration is more than a mere contract spelling out the mutual rights and obligations of the parties thereto, but assumes some of the attributes of a covenant running with the land . . ." 31 C.J.S., Estates § 199a (1996); accord, 15 Am.Jur.2d, Condominium and Cooperative Apartments § 7 (2000). "In interpreting covenants contained in the condominium declaration, the court will seek to discern the intent of the parties, and especially that of the grantor. The court has no power to alter the declaration. The condominium association is entitled to the authority to reasonably interpret its own declarations and restrictions.
"When the meaning of the declaration is interpreted, every part of the instrument must be given effect; and the court must look to the express language used in the document. Words of common usage should be construed in their plain and ordinary sense. Where the plain terms of a declaration or covenant therein are sufficiently clear, the court should construe the declaration or covenant without reference to attendant facts and circumstances or extrinsic evidence.
"The declaration of condominium is strictly construed to preclude any use that it does not explicitly authorize. Basic tenets of contract law require that the declaration be construed in favor of the nondrafting party. Any ambiguity or doubt in a declaration, at least as to the nature of the interests of the purchasing public must be construed against the author of the declaration, or against the developer who authorized the declaration, and in favor of those who make an acquisition in reliance on the recorded documents." 31 C.J.S., supra § 199b.
In the declaration at issue here, § 22.1 of article XXII, which is entitled "Insurance," provides: "To the extent reasonably available, the executive Board shall obtain and maintain insurance coverage as set forth in Sections 22.2 and 22.3 of this Article. If such insurance is not reasonably available, and the Executive Board determines that any insurance described herein will not be maintained, the Executive Board shall cause notice of that fact to be hand-delivered or sent prepaid by United States mail to all unit Owners and eligible Mortgagees at their respective last known addresses." (Emphasis added.) Section 22.4 provides as follows: "Fidelity Bonds. A blanket fidelity bond for anyone who either handles or is responsible for funds held or administered by the Association, whether or not they receive compensation for their services. The bond shall name the Association as obligee and shall cover the maximum funds that will be in custody of the Association or the manager at any time while the bond is in force, and in no event less than the sum of three (3) months' assessments plus reserve funds. The bond shall include a provision that calls for thirty (30) days' written notice to the Association, to each holder of a Security Interest in a Unit and to each servicer that services a FNMA-owned or FHLMC-owned mortgage on a Unit before the bond can be canceled or substantially modified for any reason; except that if cancellation is for non-payment of premiums, only ten (10) days' notice shall be required."
Section 22.2 pertains to property insurance, and § 22.3 pertains to liability insurance.
Section 22.6, entitled "Workers' Compensation Insurance," provides: "The Executive Board shall obtain and maintain Workers' Compensation Insurance to meet the requirements of the laws of the state of Connecticut for paid employees of the Association." (Emphasis added.) and
Section 22.7, entitled "Directors' and Officers' Liability Insurance." It provides: "The executive Board may obtain and maintain directors' and officers' liability insurance, if available, covering all of the Directors and Officers of the Association in such limits as the Executive Board may, from time to time, determine." (Emphasis added.)
Ordinarily, the question of contract interpretation is a question of the parties' intent. Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 495, 746 A.2d 1277 (2000). A determination of this intent "ordinarily presents a question of fact for the ultimate fact finder, although where the language is clear and unambiguous, it becomes a question of law for the court." Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 276, 709 A.2d 558 (1998). The language of § 22.4 is not clear and unambiguous. It employs neither the mandatory "shall," as used in §§ 22.1 and 22.6, or the permissive "may," as used in § 22.7 with respect to the board's obligation to obtain or maintain a fidelity bond. Whether the board is obligated to do so is clearly a material fact. Notably, the defendant already owned another unit and "a condominium owner may enforce a declaration of covenant, conditions, and restrictions under the law of equitable servitudes without resorting to a breach of contract cause of action against the association." 31 C.J.S., supra, § 199a.
Second, the court is unable to examine the meaning of § 22.4 in the context of the entire declaration because the parties elected to provide the court with only two pages of the document. As previously noted, Maiorana, who was employed by a licensed mortgage broker, attested: "It has been my experience that most, if not all, lenders require condominium associations to have a fidelity bond." Moreover, Maiorana testified that Easter Howard, who was the president of the association, told her that the plaintiff was attempting to obtain a fidelity bond.
For these reasons, the court finds a genuine issue of material fact exists as to whether the plaintiff's declaration requires it to obtain a fidelity bond and whether the parties contemplated that the plaintiff would do so at the time they entered into the contract for the sale of the unit. Accordingly, an issue of fact exists as to whether the plaintiff wrongfully prevented the defendant from performing his obligations under the contract and, hence, as to whether the defendant retains an equitable interest in the unit. For this reason, the plaintiff's motion for summary judgment is denied as to the plaintiff's claim to quiet title to the unit in count one of complaint, and as to the defendant's counterclaim for specific performance.
III
In count two of its complaint, the plaintiff alleges that the defendant slandered the plaintiff's title to the unit in violation of General Statutes § 47-33j in that he maliciously filed the parties' August 30, 2002 contract on the land records after the plaintiff had terminated the contract. "A cause of action for slander of title consists of the uttering or publication of a false statement derogatory to the plaintiff's title, with malice, causing special damages as a result of the diminished value of the plaintiff's property in the eyes of third parties. The publication must be false, and the plaintiff must have an estate or interest in the property slandered. Pecuniary damages must be shown in order to prevail on such a claim." (Internal quotation marks omitted) Elm Street Builders Inc. v. Enterprise Park Condominium Assn., Inc., 63 Conn.App 657, 669-70, 778 A.2d 237 (2001).
General Statutes § 47-33j provides: "No person may use the privilege of recording notices under sections 47-33f and 47-33g for the purpose of slandering the title to land. In any action brought for the purpose of quieting title to land, if the court finds that any person has recorded a claim for that purpose only, the court shall award the plaintiff all the costs of the action, including such attorneys fees as the court may allow to the plaintiff, and in addition, shall decree that the defendant asserting the claim shall pay to the plaintiff all damages the plaintiff may have sustained as the result of such notice of claim having been so recorded."
By filing the contract on the land records, the plaintiff, in essence, published to the world that he had an interest in the unit. Safford v. McNeil, 102 Conn. 684, 681 A. 721 (1925); see also First Constitution Bank v. Harbor Village Ltd., 37 Conn.App. 698, 706, 657 A.2d 111 cert. denied, 235 Conn. 902, 665 A:2d 901 (1995); and General Statutes § 47-17. For the reasons discussed in part I, however, a question of fact exists as to whether this statement is false; cf. Dean v. Riley, Conn.App. 87, 93, 623 A.2d 521 (1993); as well as to whether the statement is malicious. See Wildwood Associates, Ltd. v. Esposito, 211 Conn. 36, 50, 557 A.2d 1241 (1989).
General Statutes § 47-17 provides in relevant part: "[A]ny contract for the conveyance of land, or of any interest therein, and any instrument by which an equitable interest in land is created, in which such land is particularly described, may be recorded in the records of the town in which such land is situated; and such record shall be notice to all the world of the equitable interest thus created."
For these reasons, the plaintiff's motion for summary judgment is denied.
By the Court
Bruce L. Levin Judge of the Superior Court